This Month at Lenser April 2006

Newsletter Archive

PRESIDENT'S CORNER
By John Lenser, President
The Annual Conference for Catalog and Multichannel merchants is just around the corner, and the LENSER team would like to meet with you!

Do you want to take your company to the next level? Are you facing a perplexing challenge in your business? Or, do you want state-of-the art circulation services or creative presentation? All of my partners – Al Bessin, Michelle Farabaugh, Bill Nicolai, Geoff Wolf and Carol Worthington-Levy – will be available for "Ask the Experts" sessions throughout the conference. We are happy to spend an hour with you at no charge to discuss how we can assist you with increasing company profits and maximizing sales with any issue in the area of multichannel marketing, circulation management, catalog or web creative, or operations.

If you would like to schedule an appointment at the conference, please give me a call or send an email to me at john.lenser@lenser.com. I know that we can make a very positive contribution to your company’s growth and bottom line profits. You truly owe it to yourself to find out why over 50 catalog companies have placed LENSER on monthly retainer to provide strategic consulting and day-to-day marketing services.

We hope that you have a very successful conference!

FEATURE ARTICLE
20 Ways to Ask – and Receive – More from Your Merchandise Vendors.
By Geoff Wolf, Partner
Great merchandise is the fundamental reason customers are willing to part with their hard-earned dollars. Vendors can hold the key to your ability to effectively and profitably offer the merchandise your customers want and are willing to buy. Whether you’re just starting a catalog/e-commerce business or have been around "mailing and selling" for years, you’ll want to learn more about how to effectively work with your merchandise vendors.

CASE STUDY
How to Effectively Manage and Mail Multi-Buyers for Optimal Results
By Michelle Houston, Vice President of Circulation and Client Services
Multi-buyers – those who have purchased via catalog or the Internet more than once, from more than one company – are the prospecting gold that all catalogers hope to discover and mine. Consider these five informative guidelines when crafting your mailing strategy. Learn more

CIRCULATION TIP
By Travis Seaton, Senior Circulation and Marketing Manager
Once you’ve performed NCOA, do you take advantage of the information it provides you? For example, have you ever considered mailing to NCOA "old" addresses? Learn more

CREATIVE TIP
By Carol Worthington-Levy, Creative Partner
Does the tail wag your dog? Brand is certainly one of the most powerful tools we have in direct marketing. Under-utilized in the past, it’s now proven through studies to create ongoing recognition that can be utilized through all of your channels. Learn more

multichannel TIP
By Jude Hoffner, Senior Circulation and Marketing Manager
Have you ever thought about using email subscriber status to improve catalog response? When it comes to email as a marketing channel, determining the relative value of a contact to whom you can promote via email versus one to whom you cannot is pretty simple. Learn more

CLIENT HIGHLIGHT
Few catalogs can say their history began more than 150 years ago, but that is exactly the case with King Ranch Saddle Shop. Captain King, who founded King Ranch in 1853 just after the Mexican-American War, established the Ranch with the premise that ranching in south Texas required outstanding gear. Read more

EMPLOYEE SPOTLIGHT
Todd Miller joined LENSER in 1999 and has become our most experienced and tenured employee. Get personal and read more about Todd’s rich history at LENSER.

AFFILIATE FOCUS
One of LENSER’s most active affiliates, premier catalog internet provider DMinSite marries marketing with solid web expertise. Over the past several years, many LENSER clients have benefited from DMinSite’s online marketing services. To learn more about DMinSite, please click here.

NEWS BRIEF

• Are you attending the ACCM? LENSER is again hosting a wonderful dinner at Rhapsody Restaurant on Monday, May 8th Read more
• Our next LENSER Summit is scheduled for October 17th through the 19th. We have obtained fantastic room nights at the Four Points Sheraton for only $98 a night! Read more
• This month we welcome Bud Plant's Incredible Catalog, DineWise and GT Distributors to our family of clients.
• Jean Marie Delamater joins LENSER as an account executive in our List Services department. Read more
• LENSER is very pleased to announce the recent promotion of Jude Hoffner. Read more

Throughout the decade when I was merchandising for my catalog, Back In The Saddle, one of the constant challenges was to work effectively with the myriad vendors I depended on. There is no doubt my partnerships with these vendors allowed for the beneficial margins and, more importantly, the exclusivity which contributed so much to our company’s success.

Great merchandise is the fundamental reason customers are willing to part with their hard-earned dollars. And product vendors are the main source of that merchandise.

Think about your own reactions when you’re shopping. Have I seen the product elsewhere? Does the price create a value for me? Do I recognize the brand? Vendors can hold the key to your ability to effectively and profitably offer the merchandise your customers want and are willing to buy.

Whether you’re just starting a catalog/e-commerce business or have been around "mailing and selling" for years, you know that your vendors are key partners in your success.

If you are just starting up a catalog, you will most likely be testing various merchandising positions to find your perfect niche. The flexibility of your product vendors will be critical to your success.

If your brand position is mature and proven, your vendors can be invaluable to you in continually finding and supplying new and exciting products to meet both your customers’ needs and desires. Getting the most from your vendors requires clear communication and the establishment of a good working relationship. Whenever possible, vendors need to understand why THEY benefit by meeting your needs. It is the old WIFM (what’s in it for me) idea.

It is significant to note that all of the following ideas fall under the category, "Ask and you shall receive." Don’t be shy – your vendors are used to being asked for more and they expect it. And if you have a good relationship, it is even easier to ask.

Here are twenty ways to effectively work with your vendors:

1. Tell the vendor what price you need. Don’t be bashful!
2. Be willing to substitute if your price is not met for a certain product. This strategy will give you leverage to meet your pricing goals. Most vendors are not willing to walk away from a sale. You can always come back with a compromise.
3. Convince the vendor how much exposure they and their brand/product will receive by being placed in your catalog or on your website. One advantage a catalog offers a vendor over retail store placement is the huge exposure of the vendor’s product. Also, many vendors find a significant boost in their market position by both the visibility their product receives and the "authority" their product garners by association with your brand.
4. Remind the vendor of your upfront costs and the risks you are willing to take to sell their product. You are committing to the upfront marketing costs of featuring their products in the catalogs mailed even if only a small percentage of people seeing it actually make a purchase. The vendor gets the full exposure even if you only make minimal sales. Ask them to share in that risk. The more they are willing to work with you, the more you will be able to increase the sales of their products.
5. Ask for better pricing based on payment terms and better payment terms based on pricing and volume. Anytime you can delay writing checks, it creates "interest" dollars you are either saving or making.
6. Take advantage of terms once you negotiate them. You receive the discounted price and the vendor appreciates the timely payment.
7. Ask for quantity discounts. Ask again the next time around.
8. Ask for product exclusivity. A product with nothing else like it on the market gives you more flexibility in setting retail pricing. Exclusivity often sets the stage for a product to have greater sales, thus leading to greater success for yourself and the vendor. Exclusivity differentiates you in the marketplace even if it’s only for an introductory period.
9. If you were unable to attend a trade show where the vendor was offering a show deal, ask for the deal anyway. It may make the vendor’s show numbers look better.
10. Free Freight Allowance (FFA) can add up to significant savings. Ask for it. The vendor may have excellent freight discounts they can leverage on your behalf.
11. If a vendor is unable to offer you better prices, perhaps you can be the first to offer a product before it becomes available in the general marketplace. Be proactive and inquire about upcoming product development. Vendors like projected units sold early in their product planning cycle.
12. Ask the vendors to fill out all the necessary paperwork so you and your staff don’t have to. This includes a product specification sheet requesting that the vendor supply all the details you need on their products: weight, cubic dimensions, country of origin, care instructions, features and benefits, etc. This will save you and your staff time in asking many questions.
13. Where appropriate, have your vendors ship products to you that are "shelf-ready." It is often worth paying vendors for this as it costs money to pay your employees to make an item ready for stocking. Or for larger items, have the vendor send the goods in re-shippable "slappers" – slap a label on and ship it right back out to the customer. In many cases, this is less expensive, even with a surcharge, than paying your staff to re-package everything.
14. Consider drop shipping product directly from the vendor to your customer. You should have a policy of when it makes sense to drop ship bulkier and heavier products. If the item is a "ship alone" item and it can get shipped only once directly to your customer, it should save you money. Be sure to negotiate a favorable drop ship fee.
15. Demand that vendors notify you of late shipments so that you have a chance to better manage your backorders. Vendors want to keep your business and this will help them to do so.
16. Use vendor agreements to set expectations and ask the vendors compensate you for the cost of late shipments. This should encourage them to be on time and help you to avoid costly backorders to customers. Make vendors accountable upfront and in writing for air shipping at their expense when products are delayed. Again, vendors want to keep your business.
17. Have the vendors list freight charges and handling charges separately on their invoices. This will give you a clearer picture of any "handling" charges incurred and better management of your inbound freight costs. You can then negotiate them separately.
18. Where it is less expensive, have freight charges billed directly to your UPS or other shipping accounts to take advantage of any discounts that you may have negotiated. Even better, use an inbound freight vendor to reduce your costs – their fee is usually charged as a percentage of what you save.
19. If you have unique challenges in your business, communicate these with your vendors and ask them what they can do to help. Maybe you have warehouse space constraints, seasonality issues unique to direct selling, limited cash flow certain times of the year or special packaging needs.
20. Build a strong relationship with your vendors so they want to help you succeed. Make your success their success.

Asking your vendors to work with you on maximizing your profits is a win-win scenario if you manage things right. And be sure to say thank you. Expressing gratitude for a vendor’s efforts to give you better pricing and better service will go a long way in establishing partnerships as a way of doing business.

CASE STUDY
How to Effectively Manage and Mail Multi-Buyers for Optimal Results
By Michelle Houston, Vice President of Circulation and Client Services

Multi-buyers – those who have purchased via a catalog or the Internet more than once, from more than one company – are the prospecting gold that all catalogers hope to discover and mine. They have proven their loyalty to catalog shopping in general, and that means they are likely to buy by catalog again.

Crafting the merge-purge has become a lost art. As a result, circulation managers are losing important visibility to the type of name and its contribution potential to your overall mailing. Mailers need to rethink the traditional approach to merge-purge structure in order to uncover vital information. It is no longer appropriate to apply an all-or-nothing approach to evaluating and mailing prospecting names. Instead, by using the merge-purge effectively, catalogers can identify the most reactive names to mail and how often they can mail these names.

There are five types of multi-buyers to consider when crafting your mailing strategy:

1. Multi-buyers between outside lists and your house file. The interaction of your house file with other lists in the merge-purge is a highly effective technique to identify responsive names. Yet most mailers miss this opportunity by letting valuable names they have paid for or exchanged disappear. These names usually produce a 30%-40% higher response and deserve increased contact or reactivation. Regardless of when the multi-buyer last purchased from you, a hit with an outside list indicates recent mail order buying activity. This deserves a contact from you immediately. The chart below (Figure 1) demonstrates the response index for one of our home décor clients. These results are very typical of catalogers with a broad offering.

Figure 1

2. Traditional multi-buyers: hits between multiple outside lists. Most catalogers, at a minimum, should be tracking multi-buyers between each outside list. This standard technique is tracked separately list by list with the multis randomized so that no list takes priority over another list. Again, identifying the cross-over names allows you to find the best mail order name coming from each list. These buyers will probably account for most of the response from any given list. The chart below (Figure 2) illustrates the average lift we experience with most of our clients.

Figure 2

3. Multi-buyers between outside lists and co-op databases. A cooperative database model should not be viewed as just another list in the merge-purge. In effect, the co-ops have modeled your outside lists, and crossover names will respond at a substantially higher rate than names unique to either the co-op segments or outside lists. The models from each cooperative database and the outside lists should be placed into separate priority or family groups within the merge-purge to identify and isolate the crossover names among the groups as discrete types of multis. The chart below (Figure 3) illustrates interaction between these groups.

4. Multi-buyers between co-op databases. With multiple co-op databases to choose from, mailers are having difficulties in managing the various multis and low net percentages from the merge. But by crafting various multi groups and creating diverse multi permutations, you can take advantage of the information gleaned from using this methodology. Multi co-op names, while not as responsive as multis with outside lists, are still much better than a unique name from the merge. In Figure 3 below, you can clearly see the various response index scores for the various multi assortments vs. a unique, incremental name.

Figure 3

5. Strategic multi-buyers. The crossover names between two different types of lists have the characteristics of both lists. This is quite useful for vertical markets in obtaining lifestyle information pertaining to their marketplace. As an example, I have a garden catalog for which prospecting can sometimes be a challenge. In the merge, however, I can identify mail order propensity and lifestyle interest by crossover hits with vertical subscription or membership lists. The result: isolated prospects who are proven mail order shoppers with a lifestyle interest in the product you are selling.

Figure 4

For "general market" catalogs, the first four kinds of multi-buyers are indicative of avid mail-order activity. If you segment out these multi-buyers and evaluate them list by list, you will probably see that they are the most profitable names you are mailing. Conversely, isolating unique names allows circulation reductions in the least profitable names. For niche catalogers, the fifth type of multi-buyer can be very powerful. The intersection of two very different types of lists can provide a whole new understanding of the names.

CIRCULATION TIP
By Travis Seaton, Senior Circulation and Marketing Manager

With the proper offer, using NCOA (National Change of Address) to optimize your housefile can be a very powerful tool. It’s a well-known fact that recent movers spend money on fixing up or decorating their new homes and land. When running NCOA during your merge, you can flag segments you wouldn’t normally mail (older, infrequent, low dollar, requestors, ship to’s) and move them into a new "must mail" segment. You will generally find this is an easy way to reactivate buyers and other housefile segments you normally wouldn’t be marketing to.

CREATIVE TIP
By Carol Levy-Worthington, Creative Partner

Does the tail wag your dog? Brand is certainly one of the most powerful tools we have in direct marketing. Under-utilized in the past, brand is now proven through studies to create ongoing recognition that can be multiplied many times in the mail (both catalog and direct mail), retail, online and even in word-of-mouth and partner campaigns with other products or services.

multichannel TIP
By Jude Hoffner, Senior Circulation and Marketing Manager

Use email subscriber status to improve catalog response. When it comes to email as a marketing channel, determining the relative value of a contact to whom you can promote via email versus one to whom you cannot is pretty simple; it’s essentially an all or nothing game. You can’t market via email if you don’t have an address or permission. But what about using the opt-in/opt-out status of a contact as a predictor of catalog response? As it turns out, the difference can be significant.

Incremental response gives you an idea of the true value of your catalog as a marketing vehicle in today’s increasingly multichannel marketing world. The chart below shows the incremental response by email status, indexed against all buyers who received a catalog.

This data confirms what we might have guessed. That is, if we can’t promote to the customer via email, then your catalog becomes a more valuable marketing channel.

If you have a mature, well-managed email marketing program, you probably have the capacity to segment your contacts by email status. You’re already doing it to honor subscribe/unsubscribe requests; why not leverage it to help you make smart mailing decisions when it comes to your catalog? Don’t forget to look at the effect of recency on these segments, and always be testing.

CLIENT HIGHLIGHT
Few catalogs can say their history began more than 150 years ago, but that is exactly the case with King Ranch Saddle Shop. Captain King, who founded King Ranch in 1853 just after the Mexican-American War, established the Ranch with the premise that ranching in South Texas required outstanding gear. He needed saddles that were durable, yet lightweight, and comfortable to ride, yet easy on the horses’ backs. Unsuccessful in finding saddles of this quality, he hired experienced craftsmen who could make them, and soon began operating his own saddlery.

The fame of King Ranch custom saddles and durable leather goods quickly spread throughout the Southwest and brought with it the need to fill orders for outside customers. Soon after the turn of the century, King Ranch Saddle Shop had a catalog numbering 96 pages. Today, King Ranch Saddle Shop still manufactures several of the products in the catalog and makes custom items. Other products are contracted out to vendors throughout the United States. King Ranch sells not only saddles, but also luggage, handbags, men’s accessories, business accessories, and home furnishings.

"King Ranch is real. It’s authentic," says Rose Morales, the catalog’s general manager. "Other companies have created a lifestyle image based upon advertising, but King Ranch is the real McCoy. People not only lived it 150 years ago – they’re living it today."

When King Ranch Saddle Shop looked to expand the reach of the catalog in 2001, they hired LENSER to provide strategic consulting and to perform its day-to-day circulation management. "We decided to hire LENSER because we felt they had the best background, knowledge and expertise to take our catalog to the next level…and they have." Morales works with Al Bessin on consulting and Michelle Houston on circulation. "Michelle Houston handles our mail strategy and she is absolutely the best!"

Morales says she especially appreciates the breadth of knowledge possessed by LENSER staff. "They are not only on top of the catalog industry and direct mail but also the retail industry, merchandising, forecasting, etc. The list goes on regarding the wide array of consulting they offer. They are well-rounded and are able to offer support and advice in all areas of our business."

John Lenser says, "King Ranch is one of the most interesting clients with whom we work, both on a professional and personal level. It has been a pleasure working with Rose Morales, who was born near the Ranch and is married to one of the descendents of the village that remains on the ranch Captain King moved from Mexico to provide labor in an otherwise uninhabited area of Texas. Michelle Houston, Al Bessin, and I get a wonderful opportunity every year to stay in the 57-bedroom ranch house built by Captain King’s daughter that is located on the 957,000 acre ranch, a property that is larger than the state of Rhode Island! And, in the middle of our breakfast table in the main dining room is the Triple Crown trophy won by Assault in 1947 during the days when the Ranch produced the finest race horses in America."

In the past few years while working with LENSER, both catalog mailings and sales have more than doubled. The merchandise mix has moved to include a rich assortment of Southwest home furnishings. In the future, Morales plans to expand the catalog’s number of pages and continue to grow circulation. "There is still a large universe of names we can tap into. When we are ready, LENSER will help get us there and get us there profitably."

For more on King Ranch Saddle Shop, please visit their website at www.krsaddleshop.com

EMPLOYEE SPOTLIGHT
Todd Miller joined LENSER in 1999 and has become our most experienced and tenured employee. Todd credits his longevity to the scope of work that is performed at LENSER. "To be an effective business consultant, one needs to be both creative and cogent, eloquent and pragmatic – I would like to think I am sufficiently analytical and open-minded, because otherwise, I might have given this up a couple years ago and gone into academia," notes Todd. "Todd lends a tremendous amount of stability to our company through his comprehensive expertise in circulation, marketing, and client management," says Michelle Houston, Vice President at LENSER. "These skills anchor an already sophisticated circulation division and have allowed us to accelerate our growth into other areas."

Because of his unique skills, Todd was promoted to head up our newly created business-to-business circulation department. "It is exciting to see how quickly our B2B consulting division is growing. Business-to-business direct marketing is quite a bit more nuanced than B2C – purchases, for the most part, are still made by individuals, but the reasons for buying and the advertising techniques that prove effective are worlds apart," notes Todd. "I’m ready to lead the charge in expanding our consulting services to companies positioned outside the B2C retailing channel. The firms that hire us will appreciate our insights and experience."

Todd continues to enjoy working at LENSER, because in his words, "It is a company founded on the principles of social interaction – consulting, after all, is mostly about listening and, in turn, offering sound, useful advice. Our clients and our staff value such relations, and I find pleasure in being around folks who are this way."

In his everyday life, Todd appreciates the esoteric that can be found around him. "I am sentimental about my childhood growing up in Alaska. And since I do not own a television, I tend to be a big independent/foreign film buff (in a good year, I’ll see close to 100 films). Perhaps it's due to all the client visits we make, but I've developed a real travel bug. This year, I have plans to visit Greece and re-visit Japan, and next year, I've got my eye on Turkey, Slovenia, Germany, and Israel."

To learn more about Todd, please visit his bio.

AFFILIATE FOCUS
LENSER affiliate DMinSite marries marketing with web expertise. One of LENSER’s most active affiliates is premier catalog internet provider DMinSite. Over the past several years, many LENSER clients have benefited from DMinSite’s online marketing services. "What distinguishes DMinSite from other internet providers is that the company was founded by highly experienced direct marketers as opposed to mere ‘techies,’" says John Lenser, President of LENSER. "The company maintains a marketing perspective in everything it does. Without exception, our mutual clients have had dramatic increases in their internet sales. In some cases, the increase was tenfold."

DMinSite was founded in 2000 by Larry Kavanagh, who began his direct marketing career running the marketing department at the catalog, Gardens Alive. From there, Larry operated a successful mail-order consulting firm with clients that ranged from traditional catalog and newsletter marketers to pure-play internet companies. "We know the issues that catalogers face." says Larry. "Our 67 clients don’t have to explain as much as they would with other providers. This makes it possible for any cataloger to benefit from a powerful, multichannel marketing strategy." DMinSite does not simply develop a site and walk away. Instead, they continue to improve their clients’ web response in analyzing data and making changes based on when a potential customer visits a site and when they make a purchase.

NEWS BRIEF

• Are you attending the ACCM? LENSER is again hosting a wonderful dinner at Rhapsody Restaurant on Monday, May 8th. For more details, please contact Michele Salmon at 415.446.2500, ext 211 or email her at michele.salmon@lenser.com.

• The LENSER Summit plays a vital role in the ongoing education and professional development of our clients, and this year's event will be even bigger and better. We have lined up a wide array speakers and session material. Set your calendar for October 17th through the 19th. We have obtained fantastic room rates at the Four Points Sheraton, where the Summit will take place, at only $98 a night! Reservations can be made by calling the hotel at 415.479.8800 and identifying yourself as a member of the LENSER group. Rooms are limited, so call in advance and make your reservations early. For more details, please contact Michele Salmon at 415.446.2500, ext 211 or email her at michele.salmon@lenser.com.

• This month we welcome Bud Plant's Incredible Catalog, DineWise and GT Distributors to our family of clients.

• As we continue to grow, we continue to add new and experienced staff to the LENSER team. Jean Marie Delamater joins LENSER as an account executive in our list services department. Jean Marie brings years of account management experience in both the business-to-business arena, as well as business-to-educators. Please see her bio for additional information.

• LENSER is very pleased to announce the recent promotion of Jude Hoffner from Circulation and Marketing Manager to Senior Circulation and Marketing Manager. In two short years, Jude has become a significant resource and a very important team member at LENSER. His keen analytical skills, combined with exceptional client management and in-depth circulation knowledge, have been tremendously important to the success of his client accounts. We look forward to his continued growth at LENSER.